We Answer Some Of Your Frequently Asked Bitcoin Questions

Bitcoin and Bitcoin mining can be a bit difficult to grasp at first; we hope to answer your questions here.

Who created Bitcoin?

Bitcoin was  invented by anonymous user ‘Satoshi Nakamoto’, who published his invention in 2008, and released as open-source software in 2009.

Satoshi Nakamoto proposed bitcoin as an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees

Satoshi's anonymity often raised unjustified concerns, many of which are linked to misunderstanding of the open-source nature of Bitcoin. The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. Just like current developers, Satoshi's influence was limited to the changes he made being adopted by others and therefore he did not control Bitcoin. As such, the identity of Bitcoin's inventor is probably as relevant today as the identity of the person who invented paper

Who prints or creates bitcoin?

No one. This currency isn’t physically printed in the shadows by a central bank, unaccountable to the population, and making its own rules. Those banks can simply produce more money to cover the national debt, thus devaluing their currency

Instead, bitcoin is created digitally, by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network. This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network.

The Bitcoin protocol – the rules that make bitcoin work – say that only 21 million bitcoins can ever be created by miners. This will be reached in 2024.

Why do people trust Bitcoin?

Much of the trust in Bitcoin comes from the fact that it requires no trust at all. Bitcoin is fully open-source and decentralized. This means that anyone has access to the entire source code at any time. Any developer in the world can therefore verify exactly how Bitcoin works. All transactions and bitcoins issued into existence can be transparently consulted in real-time by anyone. All payments can be made without reliance on a third party and the whole system is protected by heavily peer-reviewed cryptographic algorithms like those used for online banking. No organization or individual can control Bitcoin, and the network remains secure even if not all of its users can be trusted.

What makes it different from regular currencies?

FREE Guide To Getting Started With Bitcoin Mining
FREE Guide To Getting Started With Bitcoin Mining

Bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.

What is bitcoin based on?

Conventional currency has been based on gold or silver. Theoretically, you knew that if you handed over a dollar at the bank, you could get some gold back (although this didn’t actually work in practice). But bitcoin isn’t based on gold; it’s based on mathematics.

Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it. The software is also open source, meaning that anyone can look at it to make sure that it does what it  supposed to do.

How do most people make money with Bitcoin?

Trade:    Buy low and sell high

Mining:   This is the most favorable as there is big money in Mining Bitcoins

What are the challenges of Bitcoin mining?

Bitcoin Mining is very capital intense and to be competitive in you have to own huge warehouses with loads of servers. The average man on the street is unable to participate in the production of the mining and therefore have to stick to trading Bitcoins. They then turn to Cloud Mining.

What are the biggest risks of cloud mining?

  1. Don’t know the owners of the Bitcoin mine.
  2. Security (hacking is a huge problem)
  3. Too small
  4. Unscrupulous companies

These companies have opened up their cloud mining interface book for us to mine in when as a matter of fact we are helping them fund the running of their servers and helping them pay electricity and other expenses. This is where the smaller companies fall away because of the huge capital outlay. They offer fantastic returns but you stand a chance of losing your money.

How do I purchase Bitcoins?

In South Africa, we like to use a service called, Local Bitcoins, www.localbitcoins.co.za.

So what you need to do is, go to, www.localbitcoins.co.za, click on 'Buy Bitcoin Now' and register for a free account.

Then:

  1. Once registered, you will receive an email with a link to click on in order to verify your account.
  2. The first thing to do is, go to your profile, top right, in the dropdown, click on 'Edit Profile'.
  3. Look for a blue bar, with a button to 'Verify Phone Number'. (you need to do this to be able to transact)
  4. Select South Africa from the dropdown, enter your cell number, and click on 'Verfiy'. You'll receive an SMS with a verification code you need to enter onscreen.
  5. Once verfied, also set your 'Real Name'. Now you're ready to purchase Bitcoins!
  6. Now, click on the "Buy Bitcoins" link in the top menu
  7. Change the currency code in the search bar to ZAR, and in the country field, type South Africa. (you can also make it default to ZAR by changing this in your profile on the site)
  8. Make sure to select, 'All online offers' from the dropdown.
  9. Click on 'Search'. You are now presented with a list of local Bitcoin traders.

  10. What you are looking for is someone that is online now (green dot next to their username). You also want to look at the experience and success rate (displayed next to their username). You're looking for someone with 1000+ transactions and a 100% success rate. Then, in the second column (Payment Method), look for someone banking with the same bank as you, or, National Bank Transfer (which means, all banks). In the 4th column (Limits), is the minimum and maximum available that trader, so you need to make sure, they have enough available for the amount you want to purchase.
  11. Once you found a trader, click on 'Buy' in the last column. If you're buying Bitcoins to pay for your mining contract, don't go ahead yet, you need to first work out how many Bitcoins you need to buy. Remember, the value goes up and down, so you only want to buy once you have everything setup and ready to go. (more on purchasing Bitcoins to pay for a mining contract, below)
  12. First of all, if you're buying from these traders, do not do a cash deposit, as the bank charges additional charges.
  13. Now, if you've verified your cell number and name, you'll be presented with a field where you can enter the amount you want to purchase and send the trader a message.

That is it. Simple as that. If you are purchasing Bitcoins to pay for your mining contract, you need work out the exact amount of Bitcoins you need to purchase. We explain that in the next Frequently Asked Question below, How do I buy a Bitcoin mining contract?.

How do I buy a mining contract?

First off, you're going to need Bitcoins to pay for your contract. The value of Bitcoins goes up and down all the time, so there are some things you will need to do first first before you make your purchase. In the previous question, right above this one, we show you how to purchase Bitcoins. (If you need assistance at any step of the way, please contact us, we'll assist you. We respond very quickly, so keep your phone handy.)

  1. Click on the 'Buy Now' button on our How to start Bitcoin Mining page (will open in new tab), under the relevant option you have selected.
  2. Once redirected to the Dragon Mine Portal, click on 'Sign Up', top right. (if you're buying a Revenue Sharing Network contract, look for the 'Join' button in the menu)
  3. Click on the 'Buy Now' button under the contract you wish to purchase
  4. You will be asked to enter your details, and then you must select the Bitcoin option to pay (unless you have a voucher). BUT BEFORE you agree to the terms and click on 'Confirm your order', make sure you already have the Bitcoins to make the payment! The value of Bitcoins change all the time, so you only get a 15 minute window to pay at the price on the next screen. So at this point, you should be ready to purchase Bitcoins, which we explain here, How to buy Bitcoins?.
  5. Now, as explained at the link above, How to buy Bitcoins?, you should already have your account setup at LocalBitcoins.com, you've selected a trader, and you're ready to purchase.
  6. LocalBitcoins.com takes a 2% cut of the trade. This is standard practice with all trading sites. The Bitcoin price also goes up and down all the time. So you are going have to add a little extra in case the price changes during the time of your purchase. I would suggest then, buy 5% extra in total on top of the Bitcoin value needed to buy your contract.
  7. So now you're ready, you know what calculation to make and you're ready to make the purchase on LocalBitcoins.com, click on 'Confirm Order' in the Dragon Mine portal.
  8. Now work out, the BTC amount on that screen, times it by 5%, then type the new amount in the BTC field on LocalBitcoins.com and ask the trader how much he will charge you for that amount of Bitcoins.
  9. If he is online, he should reply immediately. If you look at the top right of your screen, you will notice a little speech bubble. As soon as he replies, you'll get a notification there of the reply.
  10. The trader will then give you the ZAR amount you need to transfer to complete the transaction, you'll notice on the right of the screen, you will get his banking details.
  11. Then what you need to do is, login to your online banking facility, copy and paste his banking details across, and very important, make sure you enter the reference number correctly so that the trader can identify your transaction.
  12. Once you have made the transaction, you simply wait a few minutes and you'll get a notification again, top right on the LocalBitcoins.com website, once your Bitcoin has been transferred to your Wallet.
  13. Now click on 'Wallet', and you'll see your Bitcoins there along with an address. You need to copy and paste that address to the purchase screen in your Dragon Mining Systems control panel to complete the purchase.

We know this seems like a lengthy process, but if you go through the steps, it is quite simple. We are also ready to help you through this process. Simply click here to contact us. We respond very fast during business hours, so keep your phone handy!

 

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About The Bitcoin Miners Club

The Bitcoin Miners Club consists of a group of people dedicated to making the acquisition of Bitcoin Mining available to anyone. By clubbing resources together, Bitcoin can become more easily available to everyone. We believe in an open source digital currency, free from the rules and restrictions imposed by a central bank or governing body.

By standing together, we can overcome any obstacle in our way.

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